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The Richest Man in Babylon: Book Review

The Richest Man in Babylon: Book Review

Last updated on: October 27, 2011 at 7:00 am by Tim

The Richest Man in Babylon: Book Review 2011-10-27T07:00:23-05:00 Tim

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The Richest Man in Babylon opens with a brief story of a man named Bansir, who never seemed able to get ahead in life. He owed people money and didn’t really feel motivated to work hard because it felt like his money would just leave as soon as it came in. I’m sure we can relate with Bansir in some way or another, which is probably why the story opens that way. After this brief introduction, Bansir and his friends meet up with Arkad, the richest man in Babylon, hoping to become more knowledgeable about building wealth.

Throughout the rest of the book, the author, George S. Clason, shares how Arkad became the richest man in Babylon. Through seven cures, we learn how Arkad beat the cycle of living paycheck to paycheck while paying down debts and building wealth. While this story isn’t really a true account of a real person in ancient Babylon, the principles behind the story are very relevant to how we manage money today.

Before Arkad shared his seven principles of creating wealth, he shared one key principle that helped him to find the road to wealth. He said, “I found the road to wealth when I decided that a portion of all I earned was mine to keep, and so will you.”

The First Cure: Start thy purse to fattening

Written in old English for some reason, Arkad told his students the first cure for having a lean purse (in today’s terms, an empty bank account).

“For each ten coins I put in, I spent but nine.” Forcing yourself to live on 90% of your income is the first step of the 7 principles.

The Second Cure: Control thy expenditures

“That what each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary.” In other words, it will seem impossible to live on 90% of our income, but you can learn to live on less. People do it everyday, and it takes a sacrifice, but it is possible.

The Third Cure: Make thy gold multiply

“Put each coin to laboring that it may reproduce its kind…” Your money needs to be invested in order to grow. Yes it sounds simple, but building wealth is based on simple math: spend less than you make and invest your money for the future.

*Remember, this book isn’t going to share any secret formulas to picking the right stock or starting a six-figure business. It’s meant to be a foundation for people to reshape how they think about money. Every time I read the book, it’s motivating because I know that these simple principles make sense, but without the discipline to put them into practice, they’re useless.

The Fourth Cure: Guard thy treasures from loss

“Guard thy treasures from loss by investing only where thy principal is safe, where it may be reclaimed if desirable and where thou will not fail to collect a fair rental. Consult with wise men…let their wisdom protect thy treasures form unsafe investments.”

While it may be unreasonable to think that there’s an investment with zero risk of losing money, you can be wise in how you invest. Choose a financial planner carefully and don’t jump on the first investment you see.

The Fifth Cure: Make of thy dwelling a profitable investment.

Arkad’s advice here is to “Own thy own home.” While we may fall on opposite ends of the debate on whether you should rent or own a home, there are good things to owning a home today – especially if you can get a great deal at a low rate.

The Sixth Cure: Insure a future income

“Provide in advance for the needs of thy growing age and the protection of thy family.” Arkad’s advice is to make sure you have an income stream when you’re older. Today’s retirement accounts are what we can use as investment vehicles and with small and continuous contributions, your goal of producing a healthy amount of interest in 20-30 years can be achieved.

The Seventh Cure: Increase thy ability to earn

“Be in the front rank of progress and do not stand still, lest you be left behind.” Always look for more ways to improve in your job or in your profession. Are there courses that will set you apart from others? Why haven’t you taken them? Make yourself valuable by learning more and becoming indispensible to others.

Have you ever read The Richest Man in Babylon? Which of these seven principles have you found to be the most challenging?

(I have this book in audio format and in paperback on my bookshelf. I think it’s one of the most fundamental books in personal finance and I’d say it’s definitely worth the $2.50 that you can buy it for on Amazon. )

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